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Achieving Value-Based Payment Success: Implications for IT and the CIO

January 19, 2017
by Tonya Edwards, M.D., Impact Advisors
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Executive Summary: Nine CIO thought leaders from leading healthcare organizations across the country convened on October 14, 2016 for the annual Scottsdale Institute Fall CIO Summit. What resulted was a lively discussion about the challenges today’s healthcare CIOs are facing as the scales tip ever closer to value-based payment as well as a display of steadfast resolve to meet those challenges head on with innovative strategies and cutting-edge tactics. This report highlights the key focus areas of the discussion, and suggests some key strategies for success.

CIO Summit Participants: Kyle Johnson, Eastern Maine Healthcare Systems; Ken Lawonn, Sharp HealthCare; Paul Merrywell, Mountain States Health Alliance; Patrick O’Hare, Spectrum Health; Bill Russell, former CIO, Saint Joseph Health; Pat Skarulis, Memorial Sloan Kettering Cancer Center; Bruce Smith, Advocate Health Care; Brent Snyder, Adventist Health System; Jim Veline, Avera

Organizer: Scottsdale Institute; Sponsor: Impact Advisors; Moderator: C-Suite Resources, Ralph Wakerly


National health expenditures reached $3 trillion in 2014, the last year for which we have data from CMS. This accounts for about 17.5 percent of the U.S. gross domestic product. With ever increasing pressure from the rising cost of healthcare, our federal government, especially CMS, is leading the way to try to reduce healthcare spending. Voluntary alternative payment models such as ACOs, voluntary bundling programs, pay for performance and other programs have been taking shape over the past few years. But with last year’s passage of the MACRA (Medicare Access and CHIP Reauthorization Act of 2015) legislation, the stakes have been raised.

On the hospital side, we are seeing a shift to mandatory hospital bundled payment programs. The first mandatory program, in place in 67 markets, requires hospitals to participate in a bundled payment program for hip and knee replacement surgeries. Hospitals that perform the surgery are accountable for spending associated with the ensuing “episode of care.” The next mandatory bundled payment for hospitals will be for bypass surgery and acute myocardial infarctions (heart attacks), and is proposed to begin in 98 markets in the near term.

For a decade or more health systems have been preparing for this shift, some more vigorously than others, but now that it is a reality health systems are forced to rapidly lay the groundwork for success. This new era is being marked by significant investments to optimize existing EHR functionality as well as increasing focus on exchange of data, patient engagement and analytics capabilities in order to effectively take on financial risk and manage care of a patient population.

In light of these new payment models finally becoming a reality, we asked CIO thought leaders to come together for a day to discuss their challenges and strategies for success in this new paradigm. What they had to say was both predictable and surprising.

Tools for Value-Based Care

We turned our attention to tools for value-based care. Analytics, reducing variation, care management and transitions of care, cost control and patient engagement are critical components of any value-based care program. First up was analytics.


We asked, “How is your health system utilizing analytics to change provider, staff and patient behavior”? Right away we ran into challenges.

All of the health systems represented are among the leaders in healthcare analytics development. Ken Lawonn notes that Sharp has had a data warehouse for a long time. They also use the Advisory Board’s Crimson tool. Using these tools they have started to look at provider performance. The Crimson tool was implemented on the inpatient side but they found that physicians often didn’t bother to look at their performance. Adoption is a little better on the ambulatory side as the internal data warehouse is being used to identify gaps in care, but because it is not integrated into the provider workflow there is still limited adoption.

Jim Veline, Avera, agrees. “We had a third-party vendor analytics tool and had the same experience. We spent a lot of money and effort to get it rolled out and nobody used it. If operations doesn’t own it they won’t buy in and use it. We have now created our own scorecards based on what analytics the operations team wants to see with a home grown solution.” He goes on to say, “There is a sexiness about predictive analytics right now. But at the provider level there is less pragmatic value.” Avera is focusing primarily on development of registries. Bruce Smith, Advocate Health Care, agrees. “We had a similar experience. It goes back to the user. We are still in an era of doing things to physicians. From a physician’s perspective what you are giving me is going to slow me down and you are not giving me what I do want. We deploy more and more technology and doctors are less and less happy.” Brent Snyder, Adventist Health System, notes that his organization is working hard to provide user-friendly tools so users have access to data that is relevant for them.

At Spectrum Health, notes Patrick O’Hare, they are now transitioning compensation for employed providers to focus on value. He notes it will be interesting to see if this change in compensation plans will change physician behavior to be more focused on trying to fill gaps in care.

As for what the role of IT is related to analytics, answers were mixed. Pat Skarulis at Memorial Sloan Kettering Cancer Center notes, “It’s important to have users be owners.


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